AI Washing: The New Greenwashing — How The SEC’s Emerging Technologies Unit Is Rewriting The Compliance Landscape – New Technology

AI Washing: The New Greenwashing — How The SEC’s Emerging Technologies Unit Is Rewriting The Compliance Landscape – New Technology

https://www.mondaq.com/canada/new-technology/1743326/ai-washing-the-new-greenwashing-how-the-secs-emerging-technologies-unit-is-rewriting-the-compliance-landscape

Publish Date: 2026-02-11 00:49:00

Source Domain: www.mondaq.com

The U.S. Securities and Exchange Commission’s creation of
the Cybersecurity & Emerging Technologies Unit (CETU) marks a
decisive shift in how regulators approach artificial intelligence.
What began as marketing optimism has become a regulated space with
real enforcement teeth. CETU’s mission includes investigating
AI fraud, AI-themed scams, cybersecurity deception, and false or
misleading statements about emerging technologies.

Central to this new landscape is the emergence of AI
washing—the practice of overstating, exaggerating, or
inventing the capabilities of artificial intelligence systems. Much
like greenwashing, which misrepresents environmental
sustainability, AI washing misrepresents technological
sophistication.

The parallels are striking, and the regulatory consequences are
becoming equally severe.

AI Washing vs Greenwashing: Two Sides of the Same
Misrepresentation Coin

For more than a decade, regulators have pursued companies for
greenwashing—false environmental claims used to attract
investors or customers. Now, AI washing is emerging as the next
major frontier.

What they have in common

Depending on the jurisdiction, both AI washing and greenwashing
can involve:

• Overstated claims in marketing or disclosures;
• Lack of supporting evidence;
• Appealing to investor sentiment (sustainability, innovation,
  ESG, “AI-powered” solutions);
• Failure to disclose limitations or risks;
• Pressure from competitive markets fuelling exaggeration;
• Whistleblower-driven investigations;
• Material misrepresentation under securities law;
• Misleading advertising under competition law.

AI washing is even more problematic

AI washing can involve:

• Claims about algorithms, automation, or risk modelling that
  investors rely on;
• Statements about cyber or operational resilience tied directly
  to AI performance;
• Undisclosed manual processes masked as AI;
• AI-themed fraud schemes targeting retail investors;
• AI systems that, if…

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